I've never been to egypt myself but I have heard similar stories to most. I have however been to Istanbul and Morocco, which I'd imagine have very much the same kind of atmosphere (if you're a tourist, you have money and therefore are a target).
However, I wouldn't tell you not to go - you could go over there and have a great time; I certainly did in Morocco and Istanbul (granted I don't want to live in either place). I reckon its all a matter of how you compose yourself while you're over there. You'd be best to hit the ground running by buying similar clothes to locals, having a decent grasp of the language before you go and generally assert your confidence. If someone laughs and jokes with you, laugh and joke with them back, but make sure when you say No you mean No. If you carry a wallet with no money in it and tell them in arabic you're living there now, I'd bet most people would back down immediately. Don't go around with shorts, a brilliant white t-shirt, a bumbag and a camera around your neck. Just look poor, act confident and always look like you know where you're going. Again, I can't stress how much a grasp of Arabic would set you apart from targeted tourists.
Have you been to any similar Arabic countries?
Edit: Oh and find a friend fast. But you'd better be damn sure they're not a "friend" that ends up asking for money at the end of the week for his assistance.